Small Business
Research Summary
United States Small Business Administration
RS Number 125
May 1992
State Export Promotion and Small Business
by Charles Cadwell
National Small Business United, Washington, D.C.
Completed under award no. SBA-5659-ADV-90
Purpose
The growing internationalization of the marketplace is
increasingly important to U.S. business and provides an important
area of growth and expansion for many small firms. This study
examines an important avenue of assistance for the small firm
looking to expand their markets abroad; state export promotion
programs. Every state government in the nation has an export
promotion program and learning more about the important features
of those programs can help federal policymakers assist the small
exporter, as well as increase the effectiveness of those programs
for small business.
Scope and Methodology
Nine case studies of export promotion programs were conducted
to assess the common characteristics, assistance strategies, and
relative effectiveness for small business of the programs. The
states were selected in consultation with the U.S. Small Business
Administration to reflect a mix of programs, state size, and
export activity. The study does not attempt to rank the export
promotion success of the nine states.
In each of the states-California, Colorado, Illinois,
Maryland, Michigan, Nebraska, New York, Rhode Island, and
Texas-program officials and a small group of small business
owners were interviewed on the following topics:
Highlights
State Goals
States generally have ambitious and broad goals for export promotion. The goals set by legislatures tend to have multiple objectives that leave decisions on allocating scarce resources to program managers. These legislative directions are also more in the nature of licenses than mandates or limitations. Goals set by program managers tend to target levels of trade promotion activity more than export sales results.
According to Exporter magazine, only a small number of firms (about 3,600) export more than 250 shipments per year. Of the 104,000 U.S. exporters, 78 percent export less than $250,000 per year, averaging only six shipments per year with an average value of $43,000. These "infrequent" exporters are also the smaller firms. This stratification of export capability and activity suggests dramatically different assistance needs among exporters and potential exporters. State program goals tend not to take explicit account of this. Designing, marketing, and measuring assistance to the smallest exporter is a different task from developing assistance for firms that have never exported at all or that export only to a narrow market.
Most state program officials acknowledge that the ultimate measure of their success is export sales, but efforts to introduce new firms to exporting or to reach the smallest exporters are not likely to be the shortest route to this goal.
Beyond the stated goals, certain characteristics suggest goals
that are implicit in the way states run their programs. Among
these are an emphasis on existing exporters; state programs that
are provided free of charge, and states that depend on a network
of governmental and private entities for cooperation in marketing
and delivering export assistance, particularly as they attempt to
serve locations away from capital cities. It is less common,
however, for these relationships to extend to formal contracting
out. Instead, the state offices and local organizations will
share responsibilities for a broad package of services.
Successful Programs
One-on-one counseling is seen as the most helpful program, although officials in several states acknowledge that it is beyond their resource capability. Admittedly expensive, both overall and per firm, this assistance is provided without clear standards for rationing this benefit.
Export promotion was seen as an important state function and a
cost effective way of exposing large numbers of people to the
idea of exporting. Conferences and seminars promote states'
services, educate exporters, and sort out those individuals
interested in more intensive-and more expensive-counseling.
Measuring Results
There is a widespread absence of measurement of outcomes;
every state measured activity but no systematic review of the
impact of that activity occurred. It is impossible to relate
state export promotion activity to overall state exports or to
exports by the firms that have been helped. Attempts to measure
outcomes have been loosely fashioned and aimed at producing
politically useful indicators of satisfaction with the program.
They do not usually focus on future efforts on particular types
of assistance or determining relative outcomes per state dollar
expended. One exception is an Urban Institute Report prepared for
the state of Illinois in 1989. A 1990 publication, Monitoring
Economic Development Performance, also by the Urban
Institute, is an excellent starting point for states interested
in improvement in this area.
Summary
The study makes the following recommendations:
Goals for programs aimed at increasing the number of small business exporters should be stated in terms of the number of firms, thereby focusing on the long-term export capability of a broader number of firms.
Goals for programs aimed at increasing the dollar value of exports should focus on existing but infrequent exports, thereby focusing on shorter term results.
Intensive counseling programs, such as Maryland's, should be provided on a commission basis.
Seminars and training should have modest participation fees.
User surveys should identify not only whether a service was useful, but how it was useful or why it was not.
User surveys should ask specific facts, such as the number of
leads or number and value of sales, rather than projections about
future sales or jobs-judgments the individual respondent may be
unqualified to make on behalf of the firm.
For more information, contact Advocacy's Office of Economic
Research at (202)205-6530.
Ordering Information
The complete report is available from:
National Technical Information Service
U.S. Department of Commerce
5285 Port Royal Road
Springfield, VA 22161
(800)553-6847
Order Number: PB92-168657
Cost: $26.00 (paper); $12.50 (Microfiche)